Roshan Lal Aggarwal, Delhi V. ITO, Ward- 46(5), New Delhi

ITA 6350/DEL/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 6923 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 04-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Capital Gains
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.6350/DEL/2018 ASSESSMENT YEAR: 2010-11 ROSHAN LAL AGGARWAL, 2165, GALI HANUMAN PARSHAN, MASJID KHAJOOR, NEW DELHI. VS. ITO, WARD-46(5), NEW DELHI. TAN/PAN: AADPA 1938Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SATISH KHOSLA, ADV. RESPONDENT BY: SHRI S.L. ANURAGI, SR.D.R. DATE OF HEARING: 23 07 2019 DATE OF PRONOUNCEMENT: 16 10 2019 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 21.08.2018 PASSED BY COMMISSIONER OF INCOME TAX (APPEALS)-XVI, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3)/147 FOR THE ASSESSMENT YEAR 2010-11. THE SOLE GROUNDS RAISED IN THE APPEAL READS AS UNDER: 1. THAT LD. CIT (A) -16, NEW DELHI ERRED IN CONFIR MING THE ORDER PASSED BY THE ASSESSING OFFICER FOR THE ADDITION OF RS.12,47,607/-. OUT OF IT RS.7,74,000/- CONFIRMING ADDITION UNDER S ECTION 50C OF THE INCOME TAX ACT AND OF RS.4,73,607/- DISALLOW ON ACC OUNT OF COST/COST INDEX . I.T.A. NO.6350/DEL/2018 2 2. THE FACTS IN BRIEF ARE THAT ON THE BASIS OF INFO RMATION RECEIVED IN THE OFFICE OF THE LD. ASSESSING OFFICER THAT ASSESSEE HAD SOLD IMMOVABLE PROPERTY LOCATED AT NOIDA FOR RS.92,88,020/- ON 02.12.2009 AND FROM THE RETURN OF INCOME DOWNLOADED FROM AST SYSTEM, IT WAS NOT DISCERNIBLE WHETHER THE CAPITAL GAIN FROM THE SALE OF SAID PROPERTY HAS BEEN OFFERED FOR TAXATION OR NOT. BASED ON THIS INFORMAT ION, THE ASSESSEES CASE WAS REOPENED U/S.147 AND ACCORDINGL Y NOTICE U/S.148 WAS ISSUED ON 31.08.2017. LD. ASSESSING OFF ICER FROM THE PERUSAL OF THE TRANSFER DEED MADE BETWEEN THE ASSESSEE AND M/S. CONSUMMATE ENGINEERING SERVICES P VT. LTD. NOTED THAT ASSESSEE HAD SOLD HIS PLOT BEARING NO.67, B- BLOCK, SECTOR-67, NOIDA, DISTRICT-GAUTAM BUDH NAGAR , UTTAR PRADESH FOR RS.85,14,000/-, WHEREAS IN THE TRANSFER DEED THE VALUE OF THE PROPERTY AS PER CIRCLE RATE WAS RS.92, 88,000/-. THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY THE PROVISION OF SECTION 50C SHOULD NOT BE INVOKED. IN RESPONSE, THE ASSESSEE SUBMITTED THAT HE HAS TAKEN THE LEASE HOLD RIGHTS IN PLOT FROM NOIDA AUTHORITY FOR 90 YEARS AND THE SAID LEASE HOLD RIGHTS HAS BEEN TRANSFERRED TO THE PURCHASER. IT WA S ALSO SUBMITTED THAT PROVISION OF SECTION 50C IS ALSO NOT APPLICABLE ON TRANSFER OF LEASE HOLD RIGHT AND IN SUPPORT VARI OUS DECISION OF THE TRIBUNAL WERE ALSO CITED AND RELIED UPON. HO WEVER, THE ASSESSING OFFICER HELD THAT IN VIEW OF THE PROVISIO N OF SECTION 50C THE VALUE ADOPTED BY STAMP VALUATION AUTHORITY OF RS.92,88,000/- FOR THE PURPOSE OF CALCULATION OF ST AMP DUTY I.T.A. NO.6350/DEL/2018 3 SHOULD BE TAKEN AS FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF CALCULATION OF CAPITAL GAIN. 3. LD. ASSESSING OFFICER ALSO ASKED THE ASSESSEE TO FURNISH SUPPORTING DOCUMENTS/EVIDENCES FOR CLAIM OF DEDUCTI ON AS COST OF PROPERTY AND COST OF IMPROVEMENT. IN RESPON SE, THE ASSESSEE SUBMITTED THE DETAILS REGARDING COST AND IMPROVEMENT OF THE PROPERTY. HOWEVER, THE LD. ASSES SING OFFICER HAD DISALLOWED SUM OF RS.82,680/- ON THE GR OUND THAT NO PROOF OF PAYMENT WAS MADE. AND FOR THE AMOUNT OF CLAIM OF INTEREST OF RS.3,72,925/-, ASSESSING OFFICER OBS ERVED THAT THE SAME WAS INTEREST PAID ON LOAN TAKEN AGAINST OT HER PROPERTY OF THE ASSESSEE WHICH ACCORDING TO HIM HAS BEEN UTILIZED FOR THE BUSINESS PURPOSE, THEREFORE, SAME CANNOT BE ALLOWED. 4. LD. CIT(A) DECIDED THE APPEAL AGAINST THE ASSESS EE AFTER FOLLOWING DECISION OF ITAT LUCKNOW BENCH IN THE CAS E OF ITO VS. SHRI HARI OM GUPTA IN ITA NO.222/LKW/2013 ORDER DATED 11.04.2014; AND DECISION OF ITAT DELHI BENCH IN ITO VS. SH. CHANDER SHEKHAR IN ITA NO.430/DEL/ 2013, OR DER DATED 05/06/2017. 5. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT THE MAIN ADDITION OF RS.7,74,000/- IS ON ACCOUNT OF DIFFERENCE IN SALE CONSIDERATION AS PER SALE DEED AND VALUE FOR STAMP DUTY PAYMENT OF THE PROPERTY AFTER INVOKING THE DEEMING PROVISION OF SECTION 50C. IT IS AN UNDISPUTED FACT THAT ASSES SEE HAD I.T.A. NO.6350/DEL/2018 4 ACQUIRED LEASE HOLD RIGHT ON A PLOT FROM NOIDA AUTH ORITY AND HAS SOLD THE LEASE RIGHTS ON THE SAME PROPERTY FOR RS.85,14,000/-. HOWEVER, THE STAMP DUTY DETERMINED BY THE STAMP VALUATION AUTHORITY WAS AT RS. 92,88,000/-. T HE DEEMING PROVISION OF SECTION 50C IS APPLICABLE WHER E ASSESSEE RECEIVES THE CONSIDERATION AS A RESULT OF A TRANSFER OF CAPITAL ASSET BEING LAND OR BUILDING OR BOTH FOR A VALUE LESS THAN THE VALUE ADOPTED OR ASSESSED BY STAMP VALUATI ON AUTHORITY, THEN THE VALUE SO DETERMINED FOR THE PUR POSE OF STAMP DUTY IS DEEMED TO BE CONSIDERATION RECEIVED O N A TRANSFER OF A CAPITAL ASSET. THE PRICE OF LEASE HOL D LAND DEPENDS UPON THE PERIOD OF FREE HOLD LAND AND IS GE NERALLY LESS THAN THE PRICE OF FREE HOLD LAND, BECAUSE IT C AN BE TRANSFERRED TO THE PURCHASER FOR A LIMITED PERIOD A ND THEREAFTER THE LAND IS TRANSFERRED TO THE ISSUING A UTHORITY EITHER FOR TAKEOVER OR FOR RENEW THE SAME AFTER CHA RGING LEASE AMOUNT FOR FUTURE PERIOD AT THE LAND PREMIUM RATE APPLICABLE AT THAT TIME. IN THE FOLLOWING THE DECIS IONS OF THE TRIBUNAL:- I. SHRI ATUL G. PURANIK VS. ITO, BOMBAY, ITAT NO.30 51 MUM/2010 ORDER DATED 13.105.2011, II. SH. FARID AND GULMOHAMED VS. INCOME TAX OFFICER ITA NO.5136/MUM/2014 A.Y. 2010-11, VIDE ORDER DATED 16.03.2016, III. DY. COMMISSIONER OF INCOME TAX VS. TAJENDERSIN GH ITAT KOLKATA IT NO.1459/KOL/2011; IT HAS BEEN HELD THAT THE DEEMING PROVISION OF SECT ION 50C CANNOT BE MADE APPLICABLE TO LEASE HOLD RIGHTS IN L AND. I.T.A. NO.6350/DEL/2018 5 6. HOWEVER, THE LD. CIT (A) HAS REFERRED TO THE DECISION OF ITAT LUCKNOW BENCH IN THE CASE OF ITO VS. SHRI HARI OM GUPTA (SUPRA), WHICH IN FACT IS IN THE FAVOUR OF TH E ASSESSEE HOLDING THAT PROVISIONS OF SECTION 50 C CANNOT BE M ADE APPLICABLE ON TRANSFER OF LEASE HOLD RIGHTS IN LAND BY FOLLOWING CATENA OF OTHER DECISIONS OF THE TRIBUNAL. ANOTHER DECISION RELIED UPON BY THE LD. CIT(A) IS IN THE CASE OF ITO VS. CHANDER SHEKHAR IN ITA NO. 430/DEL/2013 ORDER DATED 05.06.2 017. FROM THE PLAIN READING OF THE JUDGMENT IT IS SEEN T HAT, THE FINDING WAS BASED ON PECULIAR FACTS OF THE CASE AND ISSUE WAS ALSO ENTIRELY DIFFERENT, THIS IS EVIDENT FROM FOLLO WING PASSAGE OF THE JUDGMENT IN THE CONCLUDING PARA:- ON GOING THROUGH THE AFORESAID FINDINGS OF THE LD. CTT(A), WE FIND THAT THE ASSESSEE WAS ALLOTTED A RESIDENTIAL PLOT O N 19.01.2004 IN SECTOR-105, NOIDA THROUGH LOTTERY ON PAYMENT OF ALL OTMENT MONEY OF RS. 1,30,000/-. THE TOTAL PURCHASE PRICE OF THE PLO T WAS RS. 16,75,000/-. THE ASSESSEE ON 28.02.2004 ENTERED INT O AN AGREEMENT TO SELL IN RESPECT OF THIS PLOT WITH M/S ROSEBUD CONSTRUCTION PVT. LTD THROUGH ITS DIRECTOR SH. RAJE EV SHARMA. THE ASSESSEE RECEIVED AN AMOUNT OF RS. 1,30,000/- FROM THE COMPANY IN LIEU OF AGREEING TO SELL THIS PLOT TO THE COMPAN Y. THE BALANCE AMOUNT TO BE PAID FOR THE ACQUISITION OF THE PLOT I .E. RS. 15,45,000/- WAS AGREED TO BE PAID BY THE COMPANY DIRECTLY TO TH E NOIDA AUTHORITY. THE AO HAS HELD THAT THE TRANSFER OF PRO PERTY TOOK PLACE IN THE YEAR UNDER CONSIDERATION ON 01.10.2008 AND F URTHER NO DETAIL OF THE PURCHASE PRICE OF THE PROPERTY WAS FILED BY THE ASSESSEE, HENCE, THE AO ADOPTED THE WHOLE VALUE OF STAMP VALU ATION AUTHORITY VALUE AT RS. 99,20,000/- AS THE CAPITAL G AINS RESULTING FROM THE TRANSFER OF THE PROPERTY. HOWEVER, THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE'S NAME IN THE DEED OF TR ANSFER OF LEASE I.T.A. NO.6350/DEL/2018 6 HOLD RIGHTS WAS MENTIONED ONLY BECAUSE THE ORIGINAL ALLOTMENT WAS IN HIS NAME, HENCE, THE ASSESSEE DID NOT HAVE OWNER SHIP OF THE SAID PROPERTY DURING THE YEAR UNDER CONSIDERATION A ND THEREFORE, THERE IS NO QUESTION OF TRANSACTION OF SALE OF THE SAID PROPERTY DURING THE YEAR UNDER CONSIDERATION AND CAPITAL GAI NS IS NOT ACCRUED. HOWEVER, IN OUR CONSIDERED VIEW, THE CAPIT AL GAINS SHOULD BE TAKEN INTO ACCOUNT ONLY AFTER DEDUCTED THE PRICE OF THE PLOT FROM THE VALUE OF THE PROPERTY I.E. RS. 99,20,000 (-) MI NUS RS. 16,75,000/- I.E. THE COST OF THE PLOT (TO BE PAID T O THE NOIDA AUTHORITY) = RS. 82,45,000/-. ACCORDINGLY, WE SET A SIDE THE ISSUE IN DISPUTE TO THE FILE OF THE AO WITH THE DIRECTION TO COMPUTE THE CAPITAL GAINS ON THE DIFFERENCE OF THE STAMP DUTY AMOUNT AN D PRICE OF THE IMPUGNED PROPERTY AFTER APPLYING THE RELEVANT PROVI SIONS OF THE ACT. ACCORDINGLY, THE ORDER OF THE LD. CIT (A) IS REVERS ED. 7. THUS, THE AFORESAID DECISION DOES NOT TAKE A CON TRARY VIEW, WHILE THE OTHER DECISIONS AS RELIED UPON BY T HE ASSESSEE BEFORE THE LD. CIT (A) AND ALSO BEFORE US, CLEARLY UPHOLD THE PROPOSITION THAT DEEMING PROVISION OF SECTION 50C C ANNOT BE APPLIED IN CASES OF TRANSFER OF LEASEHOLD RIGHTS IN LAND, THEREFORE THE STAMP DUTY VALUATION CANNOT BE ADOPTE D OR REPLACED BY ACTUAL CONSIDERATION RECEIVED. ACCORDIN GLY, WE HOLD THAT THE ADDITION ON ACCOUNT OF DIFFERENCE OF RS.7,74,000/- CANNOT BE MADE AND ACCORDINGLY SAME I S DIRECTED TO BE DELETED. 8. IN SO FAR AS OTHER DISALLOWANCES ARE CONCERNED, WE FIND THAT THE ASSESSEE HAS GIVEN COMPLETE DETAILS OF INT EREST PAID TO PNB HOUSING LOAN FOR THE PERIOD FROM 01.04.2007 TO 01.06.2010 WITH BANK STATEMENT FILED DURING THE ASS ESSMENT I.T.A. NO.6350/DEL/2018 7 PROCEEDINGS AND EVEN IN EARLIER ASSESSMENT YEARS SI MILAR INTEREST WAS PAID. OUT OF WHICH, INTEREST OF RS.3,7 2,000/- WAS CLAIMED TO BE ON ACCOUNT OF FUND USED FOR PLOT ON P URCHASE/ PREMIUM PAID FOR ACQUIRING LEASEHOLD RIGHTS. ASSESS ING OFFICER WITHOUT VERIFYING THE SAID AVERMENT HAS HELD THAT T HE SAME WAS USED FOR THE BUSINESS PURPOSE. FURTHER LD. CIT (A) HAS HELD THAT ASSESSEE HAS BEEN UNABLE TO PROVE THE SAM E. IF THE ASSESSEE HAS TAKEN A LOAN AND PART OF THE SAID LOAN HAS BEEN USED FOR THE PROPERTY IN CONSIDERATION THEN THE SAM E NEEDS TO BE ALLOWED. HOWEVER, HOW MUCH LOAN HAS BEEN USED FO R ACQUIRING THIS PROPERTY HAS NOT BEEN BROUGHT ON REC ORD, THEREFORE, IN THE INTEREST OF JUSTICE, WE FEEL THAT THIS MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE ASSESSIN G OFFICER AND ASSESSEE SHALL ESTABLISH AND SUBSTANTIATE THAT THE BORROWED FUNDS ON WHICH INTEREST PAID HAS BEEN CLAI MED WAS UTILIZED FOR THE ACQUISITION OF THE PROPERTY. WITH THIS DIRECTION, MATTER IS RESTORED BACK TO THE FILE OF THE ASSESSIN G OFFICER. 9. AS FAR AS THE PAYMENT OF RS.82,680/- ON ACCOUNT OF IMPROVEMENT, IT IS SEEN THAT THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE ON THE GROUND THAT NO DOCUMENTARY EVIDENCE HAS BEEN FILED AND SAME FINDING IS PERPETUATED IN T HE FINDING OF THE LD. CIT(A). THUS, WITHOUT THERE BEING ANY PR OPER REBUTTAL OF THE SAID FINDING, NO INTERFERENCE IS CA LLED FOR, THEREFORE, THE SAME IS CONFIRMED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. I.T.A. NO.6350/DEL/2018 8 ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH OCTOBER, 2019. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 16 TH OCTOBER, 2019 PKK: